Obstacles pile up for Russia's Nord Stream gas pipeline

By bne IntelliNews June 9, 2009

Bogdan Turek in Warsaw -

The construction of Gazprom's Nord Stream gas pipeline across the bottom of the Baltic Sea is running into new problems despite hopes the Baltic countries would approve it by the end of 2009. "If only one country says 'no', the implementation of the project may be impossible," admits Jens Mueller, spokesman for the Nord Stream consortium.

That country may well be Poland, which has prepared a negative environmental impact assessment of the pipeline on the Baltic area. The report, released on Monday, June 8 and sent to Nord Stream and the environmental ministries of Russia, Germany, Finland, Estonia, Latvia and Lithuania, says the project may have a devastating impact on the economic operations of 31 local governments along the Baltic shoreline. "A land alternative for the offshore pipeline has not been analysed by Nord Stream in an adequate way and it does not specify exactly who might pay for the damages if they occurred as a result of the environmental catastrophe," it says.

Poland's assessment was a requirement in line with the 1991 Espoo environmental impact assessment convention signed by 45 countries, including Poland and Russia. It obliges the parties who signed it to notify and consult each other on all major projects under construction that are likely to have an adverse environmental impact across boundaries. Similar assessments were made by the deadline of June 8 and sent to Nord Stream by the three Baltic states and Finland, which are also critics of the project.

"It seems that there will be further delay in the construction of the project," a source in the Polish Environment Ministry told bne on condition of anonymity. "The project will have to be adjusted again to meet the objections."

The Nord Stream consortium isn't using public funds from the budget of the EU to subsidize the project, so approval is dependent on domestic laws in the countries involved. Mueller acknowledged that the Russian-German project has already been delayed by at least six months due to growing opposition. Authorities in Lithuania, Estonia, Latvia and Poland are on record as opposing the project, while officials in Finland, Sweden and Denmark are monitoring developments and have started expressing reservations. "We need permits from these countries," Mueller says. "We will be able to get permits by the end of 2009, start construction in spring of 2010 and have two strings of the pipeline ready by the end of 2010."

Russia's Gazprom has 51% of the shares in Nord Stream, Germany's BASF and E.ON 20% each and Dutch Gasunia, 9%. Once completed, the pipeline would deliver 55bn cubic meters of natural gas a year to Europe. The projected construction cost of the pipeline has grown from €4.5bn to €7.4bn, Mueller said.


A resolution adopted by the City Council of the Polish coastal town of Rewa may further complicate the construction schedule. The resolution, adopted on June 5, calls on Nord Stream to pay advance compensation of PLN3bn (€680m) to the Rewa area against potential ecological damage, such as an explosion of long-buried World War II munitions or a break in the pipeline. The resolution was sent to Nord Stream and the Polish government, which was asked to support it. "We would build a kind of artificial reef offshore from the funds to protect our beaches from pollution," the sponsor of the resolution, Waldemar Jaworowski, tells bne.

Jaworowski said he has called on other local governments to follow suit and flood Nord Stream with similar demands, which could, if all participated, total PLN100bn (€22.5bn). Jaworowski said the Polish request is modeled on a demand by Danish fishermen who are seeking indemnity from damage to fisheries near Bornholm along the route of the projected gas pipeline.

The planned detonations of World War II munitions at the bottom of the Baltic Sea to clear the way for the pipeline is a danger for the environment and may trigger new protects of the Baltic countries, Polish researchers said on June 1. Mueller told bne in a telephone interview on June 2 that detonations are "possible," as well as removal of objects from the sea, but gave no timetable.

"Nord Stream did not specify measures which should be taken to minimize the impact of the detonations on the ecosystem," the official Polish assessement report said.

Tadeusz Kasperek, professor at the Polish Navy Academy in Gdynia, told a meeting of Polish experts who are preparing an impact assessment of the planned 1,220-km pipeline that up to 43,000 tonnes of munitions have been detected near Bornholm Island – the area through which the pipeline will go. "There is also about 13,000 tonnes of yperite [mustard gas] which is a very dangerous poisonous gas," Kasperek said. "If detonations take place, they will have a negative impact on the whole ecosystem. Removing the barrels with gas and munitions and neutralizing them on land would be the environment-friendly solution."

Eugeniusz Andrulewicz, an oceanographer and fishing expert in the seaport of Gdansk, told the meeting that a break in the finished pipeline would not pose a major environmental threat to the coastline. "There are no grounds to think that such a catastrophe would be a danger for the beaches in the north-western part of Poland," he said. But he added that the construction plan by Nord Stream lacks one vital item: it does not say who will pay for the dismantling of the pipeline when it stops delivering gas in some 40-50 years.

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Obstacles pile up for Russia's Nord Stream gas pipeline

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